When you purchase an individual disability insurance policy, you have two options when it comes to paying your initial premium:
1) COD Cash on Delivery. With this option, you do not pay any premium with the application. Once the policy is issued, you pay your premium at that time. No coverage is in force until you pay that initial premium. If a claim occurs during the application process, your coverage is not in force as there was no premium paid.
2) Conditionally. This option requires an initial premium payment with the application. You may write a check or have it drawn from your checking account. With this option, your coverage is in force during the process conditionally. This means that if you submit premium with the application and a claim occurs during the process, your coverage is in force. However, this is conditional that your coverage would have been approved and there were no major pre-existing conditions. For example, I had a client who submitted his application conditionally and was in a terrible accident during the process. Since he paid his premium and there were no pre-existing conditions that would have prevented the company from issuing a policy, the claim was paid.
If you apply for coverage and have a pre-existing condition such as a recent back surgery, most likely the policy would be issued with an exclusion on the back. As such, if you were to file a claim for your back, it would not be covered even though you submitted premium with your application.
If you apply conditionally and decide not to take the policy, the premium paid is fully refundable.
If you apply conditionally, do not have a claim and the policy is issued to your satisfaction, the initial premium will pay the first premium and you will then pay subsequent premiums thereafter.
For more information about applying for disability insurance or if you would like to request a quote comparison, contact Set for Life Insurance today!